No More Mr. Docile On Fraud

May 9, 1985

It's the duty of state Comptroller Gerald Lewis to scrutinize securities dealers and mortgage brokers. He isn't getting the job done. Too many people have been losing big money -- more than half a billion dollars in the past 10 years -- to Florida-based fast-buck artists.

Mr. Lewis' biggest excuse is lack of money, but even that is mostly his own failure. He has been comptroller for 10 years, but only in recent months -- as financial fiascoes have hit the headlines -- has Mr. Lewis asked the Legislature for enough money to do the job. Now he says he needs 50 new examiners. In last year's budget go-round he said he needed only nine examiners on his total staff. He should have pushed years ago for a dramatically expanded staff at higher pay.

To take on the sophisticated scams that are flooding Florida, Mr. Lewis does need a bigger budget and new legal powers. But as evidenced by a series of stories that concluded in The Orlando Sentinel Wednesday, those boosts will be wasted unless he and his department show a lot more aggressiveness.

Consider the case of State Capital Corp. of Boca Raton and 11 affiliated companies, whose February bankruptcy filing left investors wondering when, if ever, they would see their $41 million. By then the comptroller's people already had given State Capital three chances to comply with state securities law. Once would have been enough.

State Capital allegedly sold securities that weren't registered with the comptroller's office for its scrutiny. Failing to register securities is a serious crime that needs to be treated seriously with the civil suits that are part of Mr. Lewis' authority and with criminal charges that state attorneys can bring. Yet what happened in this case is typical: Mr. Lewis dropped his civil action and agreed to a negotiated settlement with State Capital.

Then the Palm Beach County state attorney dropped an investigation into criminal fraud allegations. Indeed, the relative weakness of state attorneys in combating bogus investments is another problem for Florida investors.

For one thing, a typical scam operates beyond any prosecutor's circuit. Second, many state attorney offices don't have experts in securities law. For both reasons, the Legislature should create a statewide prosecutor's office to complement Mr. Lewis' efforts.

There are two other changes the Legislature needs to make to protect Florida investors. It should give the comptroller the power to ask for court orders to close companies that don't comply with his subpoenas. Such power would have helped in the State Capital case and others. It also should give his office something that most other states already have -- the power to screen new stock issues for basic merit. Without that, some Floridians are sitting ducks for glib peddlers of valueless stock.

But no new power or new gumshoes will do for Mr. Lewis what he must do for himself after this 10-year mismatch between savvy investment peddlers and slowpoke bureaucrats. He must become as zealous and imaginative in protecting the public's money as his adversaries have been in lifting it. No longer should the comptroller's office be the docile Doberman.